G.R. Nos. 152505-06 – PRUDENTIAL GUARANTEE and ASSURANCE, INC., petitioner, vs. EQUINOX LAND CORPORATION, respondent.
SANDOVAL-GUTIERREZ, J.
Rule Synopsis
A surety is solidarily liable with the principal obligor.
Facts
Equinox Land Corporation (Equinox) contracted J’Marc Construction & Development Corporation (J’Marc; insured) for the construction of an additional five floors of its building. The latter submitted to the former surety and performance bonds issued by Prudential Guarantee and Assurance, Inc. (Prudential; insurer) to guarantee the unliquidated portion of the advance payments to J’Marc, and its faithful performance of its obligations under the construction agreement, respectively. Equinox, however, terminated the construction agreement on the grounds of violations and delays of J’Marc. It also filed a complaint for a sum of money and damages against J’Marc and its insurer, Prudential before the RTC. This case was dismissed upon Prudential’s motion alleging that jurisdiction lies with CIAC. Equinox then filed with the CIAC a request for arbitration, whereby Prudential submitted a position paper contending that the CIAC has no jurisdiction over it since it is not privy to the subject construction contract.
Issues
- Does CIAC have jurisdiction over the case?
- Should Prudential Life be held solidarily liable with J’Marc?
Ruling and Discussion
- Yes. CIAC has jurisdiction over the case.
The Supreme Court upheld CIAC’s jurisdiction over the case. It said that: after having voluntarily invoked before the RTC the jurisdiction of CIAC, Prudential is estopped to question its jurisdiction. - Yes. Prudential Life should be held solidarily liable with J’Marc.
The Supreme Court held Prudential solidarily liable with J’Marc. As a surety, it is considered under the law to be the same party as the obligor concerning whatever is adjudged regarding the latter’s obligation. Lastly, as the validity of the suretyship contract with J’Marc was admitted, as defined under Sec. 175 of the Insurance Code, it follows that Prudential’s liability under the same is solidary under the Civil Code. The SC said that the surety assumes liability as a regular party to the undertaking and hence its obligation is primary.
Dispositive
Petition denied. Decision affirmed.